Micro fulfilment is strategical placement of small warehouses and distribution facilities in the densely populated areas. This close proximity of the facility to the consumers, enables a quick and cost-effective delivery of the products that were ordered using online channels.
micro fulfillment market size was valued at $2.1 billion in 2021, and is projected to reach $88.3 billion by 2031, growing at a CAGR of 44.8% from 2022 to 2031
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A Micro Fulfillment Center is a small-scale warehouse typically located in urban areas that use automation and technology to quickly and efficiently process online orders. These centers are designed to handle high volumes of orders in a small footprint, typically ranging from a few hundred to a few thousand square feet. Unlike traditional warehouses, which are typically located outside of cities and suburbs, MFCs are strategically placed in urban areas to enable faster and more cost-effective last-mile delivery.
The growth of e-commerce has made MFCs an attractive solution for retailers looking to stay competitive in the market. Customers expect faster delivery times, and retailers who can offer same-day delivery can gain a significant competitive advantage over their rivals. Furthermore, MFCs offer retailers the opportunity to optimize their supply chain and reduce operating costs.
MFCs use a range of advanced technologies to streamline the order fulfillment process, including automation, robotics, and artificial intelligence. These technologies enable MFCs to process orders quickly and efficiently while minimizing the need for human labor. For example, orders can be picked and packed by robots, and autonomous vehicles can be used to transport products from the MFC to the customer’s doorstep. This reduces the need for manual labor and enables MFCs to process orders more quickly and accurately than traditional warehouses.
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In addition, major businesses in the micro fulfilment market offer a wide range of products and services, to meet the needs of the consumers. They constantly innovate their offerings to stay competitive in the market. For instance, in September 2021, Honeywell International Inc., introduced its latest innovation in shipping industry’s robotic technology.
There are several benefits to using MFCs for retailers. Firstly, MFCs enable retailers to offer faster delivery times, which is a significant competitive advantage in the e-commerce market. With the ability to process orders quickly and accurately, MFCs can offer same-day or even same-hour delivery to customers, which is increasingly becoming the norm for e-commerce retailers. This can help retailers attract and retain customers, increase sales, and improve customer satisfaction.
Secondly, MFCs can help retailers optimize their supply chain and reduce operating costs. By using advanced technologies like automation and robotics, MFCs can process orders more efficiently, reducing the need for manual labor and minimizing the risk of errors. This can help retailers reduce their operating costs and improve their bottom line.
It launched a smart depalletizing robot for the micro fulfilment market. This is anticipated to enable the warehouses and distribution centers automate the manual process. Moreover, major players in the e-commerce industry are partnering with technology companies for the advancement of their micro fulfilment centers with advanced products such as robots, and software.
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Thirdly, MFCs can help retailers improve their sustainability credentials. By enabling faster and more efficient delivery, MFCs can reduce the environmental impact of e-commerce by reducing the number of delivery vehicles on the road and minimizing the distance traveled by these vehicles. Additionally, MFCs can be designed to use renewable energy sources, further reducing their environmental footprint.
Despite the benefits of MFCs, there are also some challenges that need to be addressed. One of the main challenges is the high upfront cost of implementing MFCs. MFCs require significant investment in advanced technologies like automation and robotics, which can be expensive for retailers. However, over time, the cost of MFCs is likely to decrease as the technology becomes more widely adopted.
Another challenge is the limited storage capacity of MFCs. Due to their small footprint, MFCs have limited storage capacity compared to traditional warehouses. This means that retailers may need to use multiple MFCs to meet the